Foreign Leaders, For Weeks Beyond Reach, Build Entry Points

A slew of foreign leaders suddenly are rebounding from their 10-week lines, but volume behavior may not be up to snuff.

Three of China's hottest ADRs fell fast to their 10-week lines and rebounded in the past two days. Let's take a closer look.

Social-networking site YY (YY) peaked Oct. 3, reversed lower and began a 20% swoon through Tuesday's low. The stock lost ground in three of those four sessions. The worst was Tuesday's 15% crash, which saw YY slice its 10-week line as volume surged 122% above normal.

Fast upside volume is key to a successful rebound, but YY's wasn't as fast as what it recorded on the decline. That's troubling.

Real estate info site SouFun Holdings (SFUN) topped out Sept. 10, then retreated as much as 18% through Tuesday's low. Sept. 11 saw the start of a three-day, 16% losing streak. Each session saw ugly-high volume.

Two more sessions, Oct. 3 and Oct. 9, saw losses of 8% (on 173% higher volume) and 9% (on 99% higher volume, respectively. Those losses carried more than a whiff of panic.

Tuesday's rout brought SouFun to test its 10-week line. The stock on Wednesday rose 7% on 78% higher volume, then gained 8% Thursday on just average volume. Like YY, the rebound sessions aren't drawing the same level of action as the sell-offs.

Qihoo 360 Technology (QIHU), whose 14-month-old search engine is causing some perspiration at Baidu's (BIDU) headquarters, followed much the same pattern as that seen in YY and SouFun.

But volume was a touch below average, in line with YY and SouFun's action. At the same time, Tuesday's sell-off saw Qihoo's volume rise 47% above normal — well below the panicky surges seen in YY and SouFun.

Are there other stocks that are newly buyable? Yes. Look at fashion house Michael Kors (KORS) (which could use some more upside volume), Russian search engine Yandex (YNDX) and Canadian drugmaker Valeant Pharmaceuticals (VRX). But keep an eye on volume, which could yet prove to be a problem.

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07/30/2015 12:32 PM ET

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